This is a best prospect industry sector for this country. Includes a market overview and trade data.
Market size estimates for the ICT sector*:
* Due to devaluation of the lira, while the size of the domestic market increased in lira terms, in dollars terms, a slight decrease is indicated.
U.S. exports of computer and electronic products to Turkey:
Foreign vendors find it increasingly difficult to operate due to a new digital services tax, local content requirements, and restrictions on social media platforms. That said, Turkey’s young population (expected to increase further in coming years) planned large-scale projects, the government’s 2019-2023 strategic plan, 5G initiatives, and a greater focus to meet expanding consumer expectations all support continuing opportunities in this sector.
The ICT market totaled $26.8 billion in 2019, with $17 billion spent on communication technologies and $9.9 billion on information technologies (hardware, software, IT services). The sector employs 143,000 and, Turkey exported $1.1 billion in related products and services in 2019. With a large domestic market and sizeable potential, spending in the ICT sector is expected to grow.
The Turkish government’s commitment to support the development of the sector is a major advantage, with plans to accelerate the country’s digital transformation and improve ICT infrastructure. 5G trials are underway, with cloud solutions, services and devices in sectors such as banking, healthcare and media, set to benefit from the development of 5G technology. Integration and alignment with EU standards and regulations as well as exposure to industry best practices are driving Turkey to employ top-of-the-line IT solutions. Local telecom operators are speeding up IoT solutions and smart city projects. Cybersecurity will also offer opportunities in the medium term as Turkey is in a high-risk region for cyber threats, which raises the possibility of a high-impact attack on critical infrastructure.
88% of households have access to broadband internet, with internet usage among individuals aged 16-74 at 75%. About 12 million households reach the internet through fixed broadband and 87% via mobile broadband. The penetration rate of mobile phone users is nearly 100%, with 60 million mobile subscriptions for broadband and an average of 3 GB data usage per month (higher than OECD average).
Social Media Use
Turkey has 54 million active social media users (64% of the population) – an increase of 2 million over last year. The primary social media platform is YouTube, followed by Instagram and Facebook. On August 6, 2020, Parliament passed legislation that could significantly restrict access to platforms (those with more than 1 million daily users in Turkey) that are non-compliant with official requests to remove content deemed offensive. The law seeks to define social media providers and one of the requirements is that those providers have at least one representative in the country.
IT Hardware and Software
IT hardware spending, like most retail spending, fell somewhat last year, attributable somewhat to the cannibalization of tablet sales by smartphones. Software and services spending proved more resilient, with some areas seeing strong growth such as cloud computing, as cloud vendors expanded their presence and the solutions on offer and Turkish businesses became more aware of the benefits of migrating to the cloud. The main software categories were enterprise resource planning (ERP) and customer relationship management (CRM) and the largest contributors to traditional IT services sales were systems integration, consulting and computer programming.
Key sectors and areas for ICT spending:
- Financial services (online, mobile banking payments,e-commerce platforms)
- Insurance sector (Insuretech)
- 5G technology-IOT services, network and support systems
- Cloud services
- Healthcare, mobile-health
- Manufacturing (advanced automation technologies)
- Data centers and disaster recovery areas
The Turkish telecom market is highly developed, yet still has room to grow. In the mobile market, with nearly 100% penetration, growth in terms of subscriptions has not been high, but there is a strong demand for highspeed data services. Among the 81.6 million mobile phone users, 90% already use smartphones and ownership continues to increase rapidly. 4G will continue to grow until 5G begins to take over in 2022. The major GSM cellular operators in Turkey are Turkcell (41% market share), Vodafone (30%) and Turk Telekom/Avea (29%). 4.5G (LTE) technology came into use in 2016 and the number of subscribers reached 81 million (92% of the data market) in 2019. Due to 4.5G deployment, e-commerce, mobile broadband, mobile banking services and mobile television services increased, creating favorable business opportunities for investors. New technology investments and efforts to transition to 5G technology will accelerate sector expansion.
As they transition to 5G technology, operators are investing in advanced networks and partnering with providers such as Nokia, Ericsson and Huawei. Turkey wants to be an early adopter of 5G, so telecoms are preparing their infrastructure for future uses, such as smart city projects and the Internet of Things (IoT). With the introduction of LTE, IPTV, online services, content and media services, e-business, personalized services, music downloads, games, multi-play, video services, and other mobile entertainment, this segment has been developing rapidly, creating new business areas and revenues.
In Turkey, smartphone users regularly exchange their cell phones for new models, sustaining consistent growth in the handset market. Samsung has the lead in the mobile and wireless market; however, Apple’s iPhone has been extremely successful in recent years, followed by Huawei, Oppo and Vivo. GSM cell phone sets suitable for video downloading and livestreaming equipped with broadband internet access will contribute to growth in this sector.
ZTE, Nokia, Northel Telecom, Alcatel, Siemens, Ericsson and NEC supply most fixed line switches, trans-multiplexers and other telephony equipment. Nokia, Ericsson and Huawei are major network providers in Turkey. U.S. companies can be competitive in software programs required for customer databases, emergency call services, corporate management and intelligent network operation centers. Cisco, Motorola, Nokia, Ericsson and Siemens are the main GSM switch and base station suppliers. U.S. companies can be competitive in new software products required by GSM cellular operators to provide new services to their clients and improve corporate and client management.
- Communication Technologies/5G-related tech and services/Fiber optic solutions
- M2M communication/IoT
- Edge Computing Systems
- Cloud/Data Centers
- Cybersecurity solutions
- Public Investments & e-Government
- Consumer electronics
- Robotics supported by Artificial Intelligence/Augmented Reality applications
- Blockchain solutions
- Wireless equipment and services
- Internet Protocol Television (IPTV)
5G, a priority for the Turkish Government, is attracting investments in the telecommunications market. In 2019, the government allocated $5 billion of its ICT budget for this purpose. 5G commercialization will not start until early 2021 and will have few subscribers its first year, but steady growth will follow. Operators will initially look to move consumers in the major cities of Izmir, Istanbul, Ankara and Antalya to 5G while 4G will remain prominent elsewhere. The primary industries of focus for 5G will be automotive, media & entertainment, energy, health and agriculture.
The Information and Communication Technologies Authority (BTK), the authority and main entity leading 5G efforts in Turkey, formed the ‘New Generation Mobile Communication Technologies Turkey (5GTR) Forum’, comprised of government, universities, manufacturers, operators and NGOs, to provide a platform for meeting 5G requirements in the market. A goal is to enhance localization and collaboration among vertical sectors. Private companies and associations such as Ericsson, Huawei, ZTE, Vestel, Vodafone, Turkcell, Turk Telekom, Ulak Communication, the Telecommunications Businessmen Association and the Technology Development Foundation of Turkey, participate in working groups.
Fiber optic solutions are gaining market access as Turk Telekom, TTNet and other ISPs make infrastructure investments. Turkey’s regulator is also keen to ensure greater broadband access as stated in its 2019-2023 strategic plan. The broadband market currently has 16 million subscriptions, but this is expected to climb to 23 million within 10 years.
Network security against attack and viruses, email and web security, cyber governance, identity and certificate governance, mobile security, system security, data and application security are the top priorities in the market. The government has increased expenditures on hardware and software to battle cyber threats. To implement these defenses, BTK, the Ministry of Transport and Infrastructure, Ministry of Justice and Interior, the Turkish National Police, and the Turkish military will continue to update their cybersecurity technologies. The Ministry of Transport and infrastructure formed SOMEs (Cyber Incident Response Teams), which are present within all state organizations and institutions to protect them from cyber-attacks.
The young population of Turkey continues to drive sales of PCs, tablets, cell phones, consumer electronics, and cellular voice and data services. The audiovisual market is expected to rise further as smart buildings are constructed with audiovisual and control room installations and support entertainment consumer goods and services such as IPTV. The application of new emerging technologies such as Machine-to-Machine (M2M) connections, AI, blockchain and robotics will also continue to grow, underpinned by the development IoT and Industry 4.0.
- TUBISAD (Informatics Manufacturers’ Association of Turkey): www.tubisad.org.tr
- BTK (Information and Communication Technologies Authority): www.btk.gov.tr
- TBD (Informatics Association of Turkey): www.tbd.org.tr
- Fitch Solutions: www.fitchsolutions.com
- GFK: www.gfk.com/tr
- Invest in Turkey (Presidency of the Republic of Turkey Investment Office): www.invest.gov.tr/en-US
- Bthaber (IT news): www.bthaber.com
- IS’TE KOBI: www.istekobi.com.tr
- Turkish Telecom Group Investor Relations: www.ttinvestorrelations.com
- Turkish Statistical Institute: www.turkstat.gov.tr
- KPMG report on Telecom sector (in Turkish): https://assets.kpmg/content/dam/kpmg/tr/pdf/2019/04/sektorel-bakis-2019-telekomunikasyon.pdf
- TEDER (Telecommunication, Internet and Information Technologies Association): www.teder.org.tr
For further information on this section or more on potential opportunities, contact:
U.S. Commercial Service Turkey